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Dec. 16 — A fuzzy snapshot of the sharing economy workforce is emerging from the limited data available, but some figures indicate most “gig” workers are moonlighting to supplement their income rather than cobbling together full-time work from piecemeal jobs.

Lawmakers and other stakeholders are
increasingly turning their attention to the burgeoning sharing—or
on-demand—business model, in which workers often have more control over where and when they do their jobs and less access to benefits and other protections. Many say the decades-old system of categorizing workers for tax and employment purposes needs freshening up to address these new arrangements (33 HRR 1334, 12/14/15)(234 DLR A-13, 12/7/15)(29 LRW 2534, 12/9/15)(13 WLR 48, 12/11/15).

The number of workers
who identify as self-employed has declined in recent years, even as the
sharing economy has taken off, according to the Labor Department's
Bureau of Labor Statistics. Meanwhile, the Internal Revenue Service
projects that tax forms issued for traditional employment will increase
at a faster pace than forms for self-employment and other types of
income.

The data lend
some credence to worker advocates who argue that the sharing economy is
simply too small a player in the country's overall workforce to
justify potentially watering down federal labor and employment laws. The
figures also may support a stance taken by some sharing economy businesses that there's no need for additional regulation because most of the workers using their platforms want the flexibility that comes with being able to pick up some extra work on the side.

“If you want to talk about the nature of
work, you need to talk about how people are actually supporting
themselves,” Lawrence Mishel, president of the left-leaning Economic
Policy Institute, told Bloomberg BNA Dec. 14. “The whole idea that we’re becoming a nation of freelancers is bogus.”

Classification Tweaks Possible

A big issue that sharing businesses face is whether to classify workers as traditional employees who are entitled to wage and hour protections, workers' compensation, unemployment insurance benefits and tax withholdings or as independent contractors who are not.

Judges and juries may ultimately make that decision for transportation companies like Uber and Lyft, but a growing number of stakeholders are voicing their support for some type of third category to capture workers who fall somewhere in between the two categories.

Changes are likely to come slowly, at least in part because
lawmakers and regulators are trying to get a handle on just what the
sharing economy is and who's working in it. Still, many stakeholders
assume that the number of gig workers is only going to grow in the coming years.

“If we suddenly turn a blind eye and
tomorrow we have 60, 70, 80 percent of the workforce as a contingent
workforce with no social insurance at all, the irony for folks who say
they're conservative is that what you're going to end up doing is
putting more and more pressure on a feeble public entitlement system
that is underfunded.” Sen. Mark Warner (D-Va.) said Dec. 9 during a
panel event organized by the Brookings Institution. “So you might wind
up growing government rather than decreasing government because you will have no shared responsibility for eating the broccoli that is social insurance.”

Tax Data Show Pre-Uber Changes

Lawmakers and regulators also face an additional hurdle posed by the lack of precise data about workers in gig and other contingent arrangements. The BLS's contingent worker supplement to its current population survey, which some believe is the best tool for tracking contract, temporary and other nontraditional work arrangements, hasn't been updated since 2005.

“The rise of firms such as Uber, Lyft, TaskRabbit, Instacart, and others should be seen as the product rather than the cause of the growing 1099 workforce,” the George Mason researchers concluded.

The figures that are available aren't aimed specifically at tracking gig and other contingent workers,
but they do provide some insight about the sharing economy's impact on
the country's workforce. They seem to support claims that sharing workers are turning to the new platforms to make a little extra cash on the side.

A total of 17.8 million people received at least one 1099-MISC tax form issued for self-employment in 2012, according to information provided by the Treasury Department to Warner's office. Although that's a nearly 15 percent jump over 12 years, the data show that the bulk of the increase occurred before Uber and other sharing economy platforms came on the scene in 2009.

A pair of George Mason University researchers recently found the same pattern in the total number
of 1099-MISC forms issued by the IRS. They said that figure jumped by
22 percent to 91.1 million in the 14-year period ending in 2014, but the
bulk of the increase was before 2009.

“The rise of firms such as Uber, Lyft, TaskRabbit, Instacart, and others should be
seen as the product rather than the cause of the growing 1099
workforce,” the researchers concluded. “These companies are able to
offer employment on these more flexible terms only because there is a willing supply of workers eager to accept them.”

The IRS projects that the total number
of 1099-MISC forms issued will climb by more than 4 percent to 94.3
million from 2015 to 2022. It expects W-2 forms issued for traditional
employment income to rise by 5 percent to 250.3 million over the same
time.

The tax data don't show whether those receiving the forms worked as full-time contractors or simply picked up some extra cash through side gigs.
The Treasury Department did say in its letter to Warner, however, that
the median earnings per 1099-MISC issued in 2012 was $5,000.

The Treasury Department's figures were based on a random, 1 percent sample of workers who received a 1099-MISC form.

Workers Identifying as Self-Employed Declining

Meanwhile, the number of workers who consider themselves self-employed is on the decline.

Monthly survey results from the Bureau of Labor Statistics show that the total number of workers who say they're self-employed declined by 9 percent to about 9.4 million from January 2000 to November 2015. The self-employed workforce represents just more than 6 percent of the country's 149.3 million workers, calculated on a seasonally adjusted basis.

The data also have limits: they depend entirely on voluntary responses from survey participants that may vary based on how the participants view their work. The figures also included self-employed workers such as taxi and delivery drivers who aren't operating in sharing businesses and may not account for workers who supplement traditional employment earnings with gig or other contractor work.

For their part, many of the biggest names in the on-demand game say most of their workers aren't doing the gigs full time. Uber
says half of its contractors drive fewer than 10 hours each week, while
Lyft maintains that 76 percent of its drivers are on the road fewer
than 15 hours per week.

Both companies declined Bloomberg BNA's request for additional data and information about drivers' hours and pay.

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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